11/23/2009

Recent US housing stats continue to look good, despite a minor “hiccup” in new home sales in September, when it dropped 3.6% from the month before. Fortunately, the inventory of new homes was also down and the months of supply stayed at 7.5 months, down from 10.9 months a year ago. Meanwhile, housing starts dropped 10.6% in October from September to 529,000 units. This is excellent news, because it supports the burn off process of vacant for sale homes, which has been going on lately. The supply and demand news was also good in the resale market. Existing home sales jumped 10.3% in October from September, partially driven by tax changes. Resale listings declined 3.7%, which brought the months of supply of resale homes to 7.0 and iinside the comfort zone of 6 to 8 month. Finally, housing contributed positively to GDP growth in 2009 Q3, the first time since 2005 Q4. This is an important harbinger of change, if only to show that housing can contribute to GDP growth again (click image below to see full chart).